Moody's downgrades Co-op Bank's debt rating to 'junk'

Last month, the Co-op pulled out of a deal to buy 630 bank branches from Lloyds Banking Group

Ratings agency Moody's has downgraded the Co-operative Bank's debt rating to "junk" status, citing fears that it is vulnerable to potential losses.

The agency warned that the bank may need "external support" if it could not strengthen its balance sheet.

The Co-op said it was "disappointed" by Moody's decision.

The news preceded the resignation of chief executive, Barry Tootell, following the bank's failure to buy 631 branches from Lloyds Banking Group.

What I think the downgrade highlights... is whether the Co-operative group, with its leading position in supermarkets and funeral homes (for example), is the best owner of a bank, at a time when profit margins in banking are so low, and may remain so